Average U.S. mortgage rates have reached a high not seen in seven years, with the 30 year fixed at 4.61 percent, said Freddie Mac in its weekly update.
That long-term rate matches the highest level since May 19, 2011. “Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” says Sam Khater, Freddie Mac’s chief economist “Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.”
This years higher mortgage rates have yet to make a big dent in the strong demand from buyers in most markets, he added. However, “inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”
Mortgage rates, which somewhat follow the yield on the 10-year Treasury, started the year right about 4 percent but began rising almost quickly.Rates have been expected to surge with the Federal Reserve increasings its lending rate and pulling back its investments in mortgage-backed bonds.
A potential homebuyer’s ability to afford a home is becoming more daungting as increases in property values outpace growth in income and as interest rates climb.
Here is Freddie Mac’s morgtate rate rundown for this week:
- 30-year fixed-rate mortgage (FRM) averaged 4.61 percent with an average 0.4 point for the week ending May 17, 2018, up from last week when it averaged 4.55 percent. A year ago at this time, the 30-year FRM averaged 4.02 percent.
- 15-year FRM this week averaged 4.08 percent with an average 0.4 point, up from last week when it averaged 4.01 percent. A year ago at this time, the 15-year FRM averaged 3.27 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.82 percent this week with an average 0.3 point, up from last week when it averaged 3.77 percent. A year ago at this time, the 5-year ARM averaged 3.13 percent.